The tax would have been levied against the leaseholders of the North Slope's 35 trillion cubic feet of natural gas reserves until the gas starts flowing to market.

With 72 percent of the state's 439 precincts reporting, more than 65 percent of voters came out against the proposal.

Democratic Rep. Eric Croft of Anchorage, the main sponsor of the initiative, interpreted the results as Alaskans wanting to give the oil companies operating in the state a chance to do good by committing to a gas pipeline.

"Everybody wants a gas line, but they want to see if we can do it without taking out a big hammer," Croft said. "That's fair enough, I trust the people. We'll give that a try. But if these people continue to hold the gas hostage, we may see it again."

Opponents of the measure say the tax would have killed the $25 billion pipeline project, while its proponents say it is the only way to force oil companies to commit to building a pipeline.